September 20, 2017

Farmers Rewarded – APMC Monopoly Ends

Recently the Maharashtra state government made changes in the Agricultural Produce Market Committee (APMC) act to allow farmers to sell vegetables and fruits directly to consumers, bypassing the licensed traders at APMC. Also changes have been made in the way commision was being charged to farmers.

This led to the the market committees protesting vigorously under the pretext of farmer welfare. They claim that farmers do not have the capability of the time or the necessary mechanism to sell their produce directly in the market and so would be the losers in this exercise.

Most of these APMC market committees are filled with appointees and minions of Congress and Sharad Pawar led NCP. They have a near monopoly on selling of fruits and vegetables and has helped them earn supernormal profits at the cost of farmers and consumers. This has also created the patronage network that binds the farmers towards Congress and NCP. Farmers who have to deal with the APMC guys cannot possibly antagonize the local Cong or NCP satraps.

Under the current mechanism, farmers have to bring their produce to the various market yards established across the state (Navi Mumbai APMC being the largest). There they have to sell their produce to the APMC licensed traders. Farmers also have to pay an APMC cess and loading charges to the porters. Past experience suggests that the farmers got very less value for their produce and the consumers pay much more, due to chain of traders involved. The supernormal profits are earned by the various traders in the chain.

APMC traders across market yards in Maharashtra have been on strike for last two days creating the risk of rise in vegetable and fruit prices. This can lead to an increase in the food inflation. Traders and APMC officials feel that the possibility of rise in food inflation, will cause the state government to retract their decision. However, the traders have to contend with an unexpected challenge. The state government led by newly appointed MoS Agriculture and Cooperatives Sadabhau Khot (from BJP ally Swabhimani Shetkari Sanghatna) has aggressively taken on the traders. He is supported by his senior minister Subhash Deshmukh.

State government has taken a multi pronged approach:

1. Farmers are being encouraged to bring their produce directly to the cities.
2. Exempted toll on trucks bringing vegetables into major cities and towns.
2. Working out alternate mechanism for farmers to sell their produce directly to the end consumers and small vegetable vendors
3. Action threatened against traders for being on an indefinite strike
4. Deshmukh is in talks with traders for an amicable solution to end the strike

DSCN0033A small opening has already been made in challenging the APMC monopoly over selling of vegetables and fruits. Today 300 trucks filled with vegetables reached Dadar (in Mumbai) and about 200 trucks reached Pune city. The farmers who had brought their produce sold it directly to the consumers at these places. The govt plans to replicate this in other cities as well.

Interviews of farmers shown on regional Marathi channels ABP Majha and Zee 24 Taas have been encouraging for this experiment. Farmers seem to be very happy about getting good prices for their produce and not having to pay APMC cess. Some stories are indeed eye opening.

A farmer sold lady’s finger (bhindi) today to consumers at Rs. 40 to 60/kg. As per him, the price he got in the APMC in the recent past was Rs. 12 to 15/kg. That’s an increase in realisation of 300% to 400%. Furthermore, the benefit to the end consumers is apparent as the prices of lady’s finger in local markets through the APMC chain of traders is Rs. 120/kg. The end consumer can save 50% on the price of veggies and fruits. This will directly have an impact on food inflation and could help reduce the Consumer Price Index (CPI or the measure of retail inflation). Currently it hovers around the 5.77% mark, just short of the government and RBI threshold of 6%.

This is just a small start and the real test of the Maharashtra government will be putting in place alternate mechanism to allow farmers to sell their produce easily. This could involve giving them time and space in the municipality markets or other designated areas. Raju Shetti of Swabhimani Shetkari Sangathan has said that his party will ask permission from the state government to directly sell fruits and vegetables on open grounds, school grounds and other public places.

There is precedent for this in states like Haryana, Andhra Pradesh and Tamil Nadu. And this is precisely the biggest challenge in front of the BJP led state government which has appointed a committee led by senior minister Chandrakant dada Patil to decide on the alternate mechanism for direct selling.

The outcome of this experiment will play a big part in fulfilling Prime Minister Modi’s vision of doubling farmer’s income by 2022.

Written by: Mandar Sawant

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